Israel Background Following World War II, the British withdrew from their mandate of Palestine, and the UN partitioned the area into Arab and Jewish states, an arrangement rejected by the Arabs. Subsequently, the Israelis defeated the Arabs in a series of wars without ending the deep tensions between the two sides. The territories occupied by Israel since the 1967 war are not included in the Israel country profile, unless otherwise noted. On 25 April 1982, Israel withdrew from the Sinai pursuant to the 1979 Israel-Egypt Peace Treaty. Outstanding territorial and other disputes with Jordan were resolved in the 26 October 1994 Israel-Jordan Treaty of Peace. In addition, on 25 May 2000, Israel withdrew unilaterally from southern Lebanon, which it had occupied since 1982. In keeping with the framework established at the Madrid Conference in October 1991, bilateral negotiations were conducted between Israel and Palestinian representatives (from the Israeli-occupied West Bank and Gaza Strip) and Syria to achieve a permanent settlement. But progress toward a permanent status agreement has been undermined by the outbreak of Palestinian-Israeli violence since September 2000.
Israel Economy Israel has a technologically advanced market economy with substantial government participation. It depends on imports of crude oil, grains, raw materials, and military equipment. Despite limited natural resources, Israel has intensively developed its agricultural and industrial sectors over the past 20 years. Israel imports significant quantities of grain but is largely self-sufficient in other agricultural products. Cut diamonds, high-technology equipment, and agricultural products (fruits and vegetables) are the leading exports. Israel usually posts sizable current account deficits, which are covered by large transfer payments from abroad and by foreign loans. Roughly half of the government's external debt is owed to the US, which is its major source of economic and military aid. The influx of Jewish immigrants from the former USSR during the period 1989-99, coupled with the opening of new markets at the end of the Cold War, energized Israel's economy, which grew rapidly in the early 1990s; growth began moderating in 1996 when the government imposed tighter fiscal and monetary policies and the immigration bonus petered out. Growth was a strong 7.2% in 2000, but the bitter Israeli-Palestinian conflict, difficulties in the high-technology, construction, and tourist sectors, and fiscal austerity in the face of growing inflation led to small declines in GDP in 2001 and 2002.
Israel Location Middle East, bordering the Mediterranean Sea, between Egypt and Lebanon
Israel Flag white with a blue hexagram (six-pointed linear star) known as the Magen David (Shield of David) centered between two equal horizontal blue bands near the top and bottom edges of the flag